THOUSANDS of people are failing to make any inroads into their credit card debt, despite customers cutting up hundreds of thousands of cards and making efforts to pay off their bills.

The average credit card debt is now €1,330 -- down only marginally from 2008, when credit card debt peaked, Central Bank officials told an Oireachtas committee yesterday.

The average amount owed has fallen by just €20 in the last three years. This is despite the fact that the overall amount owed on credit cards has fallen from €3bn to €2.6bn over the same period as 300,000 accounts were closed.

There are now 1.9 million personal credit card accounts in operation, compared to 2.2 million at the end of 2008.

According to Central Bank statistician Joe McNeill, overall card indebtedness is falling, but there is a core of 'historic debt' that is not being repaid.

Part of the reason for the fall in the overall amount owed is the decision by some card companies to leave the Irish market, Mr McNeill said.

The average amount owed on a card is now €1,330 -- down only slightly from the €1,350 owed on each card in 2008. Mr McNeill said this suggested that many new transactions were being repaid -- but that a portion of historic debt was not being reduced.

The committee heard that overall personal debt, including mortgages, amounted to €190bn, compared to overall assets of €600bn.

Committee chairman Labour's Alex White suggested that people may have a "head in the sand" attitude in not paying off their credit card bills before tackling other debts.

Mr McNeill said that households were spending less than they are earning, but the money was going towards repaying debts, rather than spending.

He added that this had negative implications for the economy.

Meanwhile, Finance Minister Michael Noonan yesterday insisted it was "premature" for a major ratings agency to suggest our new bankruptcy rules could lead to "widespread debt forgiveness" and encourage borrowers to stop paying their loans.

Warning

The comments came after Moody's suggested up to 25pc of Ireland's mortgages were "susceptible" to being written down under the new scheme, which could "discourage" financially-sound people from repaying their debts.

Moody's three-page dispatch made the ratings agency the first international authority to issue such a stark warning on the new legislation -- even though the report's author admitted the impact of the new regime could not be predicted until more detail about the rules was revealed.

"It is premature for a ratings agency to make any kind of call like that," Mr Noonan told journalists yesterday, when asked about Moody's claims.

The minister stressed that the detail of the Personal Insolvency Bill had yet to be worked out and a draft of the bill would not be available until April.

This meant "nobody has the basic information to make that kind of assessment", he added.

The Moody's senior analyst who wrote the report was unavailable for comment last night, the ratings agency's spokeswoman said.

A spokesman for the Central Bank last night declined to comment on the material points raised in Moody's assessment, but senior sources there have previously expressed concerns about mortgage debt being drawn into the new personal insolvency regime.